Although the labor market is slowing, labor shortages are still persistent. According to The Conference Board, 44% of HR leaders expect to continue hiring over the next six months, with an anticipated downturn in retention. With CHROs expecting employee engagement to decline, it’s imperative to strengthen the employee experience and organizational culture to keep employees engaged and productive.
In the rest of 2024, CHROs should consider moving toward a new model of leadership—radical adaptability—for sustaining continuous change throughout the coming opportunities and transformation. As the world of work undergoes rapid and profound changes, there are three key areas CHROs will need to prioritize to set up their organizations for success and help shape the future of HR. They include:
- Strengthening employee retention and engagement: Navigating a dynamic labor market and how CHROs can reimagine their talent strategies to be more intentional about employee engagement and retention.
- The augmentation of jobs in the AI era: How CHROs can prepare their workforce by leveraging AI insights for jobs, adopting AI and offering opportunities for employees to ensure retention and career augmentation.
- Improving the productivity problem: The steps CHROs should take to help their employees be more productive and promote psychological and economic wellbeing.
Contrary to the expectations of many experts and economists, 2023 failed to produce a recession, although the labor market was still volatile in many ways. Shortages in some sectors and layoffs in others all contributed to uncertainty, but without reaching the tipping point. As a result, many workers have come out of this period more experienced, stronger and with significantly more skills, making employee engagement and retention critical for many organizations.
The labor market is expected to continue adding jobs through the first half of 2024, but job growth is anticipated to slow and the unemployment rate to gradually increase. If unemployment remains under the 4% range, then a tight labor supply would mean a strong market for job seekers and, consequently, a continued challenge for employers in recruiting the necessary workforce.
This need for workers with essential technical skills will drive organizations to invest in the development of their current employees, particularly in critical areas. Identifying the skills required to achieve organizational goals, assessing existing skills and strategizing to bridge this gap will be vital. Fortunately, these sought-after skills can often be developed through upskilling programs.
Moreover, to retain their workforce, businesses need to prioritize employee experience, offering competitive compensation and benefits in addition to cultivating a culture of trust and inclusion. A Conference Board survey reveals that approximately 33% of chief human resource officers anticipate a decline in employee engagement, and 25% foresee workforce losses in 2024. In light of this, organizations should focus on internal mobility to keep employees engaged and productive. Upskilling existing staff not only caters to the organization’s need for skills but also benefits employees by equipping them to thrive alongside new technologies and the opportunities they create.
Prepare the workforce for AI’s productivity gains
AI, in particular, is significantly impacting the labor market, changing how people work. Roles are rapidly evolving, and although some jobs face disruption, new roles that complement AI will emerge in their place.
AI-related job displacement fears have been overstated because they are more obvious and easier to conceive than AI’s potential to create new, unknown jobs. For example, an entirely new category of jobs could be created where teams are tasked with choosing which AI tools are right for each team and which workforce strategies are most important to keep teams agile, productive and engaged.
AI could also start bridging previously disparate areas of expertise. Roles like “legal engineer” could be introduced to work on an AI system that creates legal contracts based on inputs. This role would confirm that the software works but also could research legal precedents to tweak contracts and make changes to the product. Creating efficiencies in this way leads to an increase in productivity across the board.
The World Economic Forum’s Future of Jobs Report finds that 49% of those surveyed across industries anticipate AI to be a catalyst for job creation. This will be a major shift in roles and the skills required to perform them.
This is why it’s essential to upskill. As roles inevitably change, the goal should be for AI to complement human labor and increase the overall rate of speed, efficiency and productivity that organizations can provide. As a result, companies will hire more people because of what the combination of AI and humans can achieve. This will depend on the AI systems’ ability to overcome displacement and increase the value of the tasks undertaken by human workers.
If successful, AI will forge entirely new positions, industries and learning opportunities while enhancing employee skills, creating a higher ceiling and enabling wider prosperity for every forward-thinking organization.
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